Gov’t to Impose Excise Tax on Plastic Bags in July

Gov’t to Impose Excise Tax on Plastic Bags in July

The government plans to impose an excise tax on plastic bags this year in an effort to cut down plastic use and diversify excise revenue, an official said on Tuesday.

The government plans to impose an excise tax on plastic bags this year in an effort to cut down plastic use and diversify excise revenue, an official said on Tuesday (20/02).

"The important thing is to get approval from [House of Representatives’s] Commission XI [to impose the plastic bag excise tax], which is ready to be submitted by the government," said Heru Pambudi, director general of customs and excise at the Ministry of Finance.

The House of Representatives’s Commission XI oversees the finance sector and banks.

Heru said tariffs on recycled plastics will be lower than those of non-recyclable plastics.

The imposition is expected to encourage the development of environment-friendly products. Companies that use recycled materials will receive fiscal incentives, Heru said.

Indonesia is the second largest marine polluter in the world, just after China. Around 80 percent of Indonesia’s 1.3 tons of ocean waste comes from improperly disposed waste from land.

The country aims to reduce the amount of its plastic marine debris by 70 percent by 2025.

The ministry also expects the new excise tax on plastic bags to diversify its excise tax collection, which is currently centered on tobacco-related products.

In the 2018 state budget, the government targets to receive Rp 148.23 trillion ($10.9 billion) from its cigarette excise tax, equivalent to 95.4 percent of the total excise revenue target of Rp 155.40 trillion.